Nick Pugh
Nick Pugh 9 November 2017

Targeting Shoppers As They Shop

There are many different tools and techniques available for brands to promote themselves in-store. Collectively these are known as shopper marketing. But why does shopper marketing campaigns often deliver a poor return on investment?

There are many different tools and techniques available for brands to promote themselves in-store. Collectively these are known as shopper marketing. Investment in shopper marketing represents up to 25 per cent of many brands’ total marketing spend. The biggest spenders are the fast-moving consumer goods (FMCG) companies.

However, there is relatively little attention paid to the effectiveness of this channel, and this is one reason why it often yields unacceptably low levels of return on investment (ROI). With more opportunities than ever available for brands to target shoppers while they are actually shopping, the purpose of this article is to explain how brands can optimise their shopper marketing mix. It identifies the best ways marketers can secure the optimal promotional strategy in-store, across their portfolio of products, and across different retailers.

Shopper marketing is in-store activation undertaken and funded by brands, on the physical – and now digital – properties of retailers. The purpose of shopper marketing campaigns is to reach shoppers as they shop and trigger behaviour just before the moment of purchase. Shopper marketing aims to persuade consumers to put products into a trolley or click ‘add to basket’.

Shopper marketing tools and techniques are incredibly varied. There’s a lot of space and potential for communication right across the architecture of a supermarket: from car and trolley parks to trolleys and baskets; from signage outside the store to signage inside. This includes signage on the floor, wobbling from the shelf, as flags and banners suspended from the ceiling, in-house magazines, on in-store TV, and by sampling products in person. Shopper marketing has its own jargon, from recipe barkers to side fins, toby boards to aisle arches.

Our best, informed estimates suggest that brands are investing around £500m a year in shopper marketing in the UK alone. Shopper marketing spend – also known as ‘non-price’ – often accounts for around 25 per cent of total marketing spend. Budgets to fund shopper marketing are not, typically, controlled by one function but often sit across brand, sales, and dedicated shopper teams, depending on the scale and organisational structure of the manufacturer.

Despite the significant investment that brands make in shopper marketing, until recently most have invested very little in robust analytics to determine return on this investment. Compared with what marketing and sales invest in understanding the ROI of their media and promotional spend – in-house and in partnership with external measurement experts – shopper marketing has historically been commissioned with only limited scrutiny. Reasons for this include:

• Brands feel that shopper marketing is simply the price of doing business, and supermarket buyers often tell manufacturers that investment is required to support their decision to list and stock the product

• Shopper marketing budgets are wrapped into trade programmes, which contain additional – albeit unmeasured – incentives

• Commercial and shopper teams have little or no experience commissioning ROI analytics

When shopper marketing campaigns are analysed, they are often shown to deliver very low return-on-investment (ROI). This is particularly true in comparison with media and promotional campaigns. Shopper marketing typically delivers an ROI of 20p for every £1 invested, meaning that 80p is lost per £1 spent.

There are a number of reasons why shopper marketing campaigns deliver such poor ROI.

Some of the channels available are notoriously poor, delivering at best an ROI below 10p for each £1 invested. This includes channels such as advertising boards at the end of a trolley, trolley bays, car park ads and security shrouds. In general, the further locations are from the actual fixture where the product is shelved, the less effective they are at triggering purchase.

Shopper marketing campaigns that are not analysed can never be optimised. Since many shopper tools and techniques deliver such low levels of ROI and most are never analysed, much of the annual £500m spend is effectively eroding profit for brands. But it doesn’t have to be this way.  It is possible to help the commercial and shopper teams understand which channels work best and which don’t work at all; which should be prioritised, and which should be removed from the shopper marketing schedule altogether.

Ebiquity suggests using high-definition test vs control analytics. In a given retailer’s estate, stores can be allocated to a test cell (where specific shopper activity is taking place) and others into the control cell (where it is not). The control cell can then be refined via optimisation techniques to ensure it is well-matched to the test cell – as such, the control set becomes a DNA twin of the test set. This approach allows us to measure the incremental impact of different shopper activities with confidence (due to incredibly low error margins).

Many retailers offer manufacturers and brands a package of different in-store channels for their shopper marketing programmes: for instance, some point of sale plus trolley bays, floor stickers, and hanging flags. But because it is possible to understand in granular detail which channels work and which don’t, commercial teams who invest in shopper ROI analytics are able to have informed negotiations with their retail partners about shopper marketing.

Empowered with this intelligence, they can say: “I have this amount of money to spend, but I want to spend it here and here, and not there and there. This will be a win:win for both of us because it will drive topline sales and deliver better ROI, which we both want.”

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